Costa’s warning: living wage increase could cost customers

Costa Coffee owner Whitbread has warned that its prices will rise following the introduction of the National Living Wage in April.

Andy Harrison, CEO of the company, which also owns Premier Inn, said there would be “selective price increases” to cover the extra £15m to £20m that he expects the living wage to cost his business.

According to The Independent, he said: “I cannot rule out price increases when there has been such a big increase in the single-largest cost part of our business – people.

“We are supportive of a steady increase in the national living wage but this is quite a big one which came out of the blue in the summer Budget.”

Harrison stated that details regarding which prices might be raised have not yet been decided and would be revealed with the group’s first-half results next month.

Whitbread is one of the UK’s biggest employers with a total of around 42,000 hourly paid staff. Of those, 16,000 are over 25 and currently paid £7.20 or less an hour, and so are set to benefit from the introduction of the living wage.

The company also owns the Beefeater, Brewers Fayre, Table Table and Taybarns restaurant chains.

The National Living Wage was announced by George Osbourne in July. It will increase the current minimum wage for over-25s from £6.50ph to £7.20ph from next April onwards, with the figure planned to rise to £9 by 2020.